DEPUTY COMMISIONER OF INCOME TAX CIRCLE 3(1)(1) AHMEDABAD, AHMEDABAD vs. AADINATH DEVELOPERS, AHMEDABAD

In appeal, CIT(A) observed that the assessment order was passed by the Assessing Officer under Section 144 r.w.s. 144B of the Act and the order was passed on ex-parte basis due to non-compliance on the part of the assessee in response to various notices issued by the Assessing Officer. During the appellate proceedings, the assesee submitted before CIT(A) that sufficient opportunity was not provided by the Assessing Officer to the assessee to produce their submissions. Further, the assessee requested for admission of additional evidences under Rule 46A of the Income Tax Rules, 1961. In light of these facts and in view of amendment to Section 251 vide Finance Act, 2024, the CIT(A) set-aside the assessment order and referred the case back to the file of Assessing As per Amendment to Section 251 vide Finance Act, 2024, with effect from 1st “5.2 day of October, 2024, the CIT (A) may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment, where such appeal is against an order of assessment made under section 144. 5.3 Considering the facts and circumstances of the case and the submissions of the assessee, the assessment order passed by the AO u/s. 144 r.w.s. 144B of the Income tax Act, 1961 is set aside and is referred back to the AO for making a fresh assessment. Needless to add, the AO shall afford adequate opportunity of being heard to the assessee before passing the assessment order de novo. In view of this, grounds no. 1, 5 & 6 are ALLOWED FOR STATISTICAL PURPSOE.”

The only grievance of the Department before us is that in the order passed by the Assessing Officer, though he had mentioned that such order was passed under Section 144 r.w.s. 144B of the Act, however, on perusal of the assessment order, it is seen that the assessee had in fact filed response dated 14.02.2024 before the Assessing Officer for his consideration. The Assessing Officer had passed the assessment order after considering the reply of the assessee, as discussed at Paragraph 4 of the assessment order. Therefore, this indicates that the assessment in case was not passed on ex-parte basis and the case of the assessee does not fall under Section 251(1)(a) of the Act. Therefore, it was submitted that Ld. CIT(A) erred in relying on the new amendment to Section 251(1)(a) of the Act and had incorrectly set-aside the case of the assessee to the file of Assessing Officer for de-novo consideration.

On going through the case records, we find that grievance raised by the Department is purely academic in nature. In the present case, substantial additions have been made by the Assessing Officer and the income of the assessee has been determined at Rs. 2,53,34,177/- and consequently, a tax demand of Rs. 1,77,65,600/- has been raised upon the assessee. The CIT(A)’s DCIT vs. Aadinath Developers Asst.Year –2022-23 - 4– order does not cause any prejudice to the interest of the Revenue, as the assessment has only been set aside for fresh consideration. It is also evident from the order that the CIT(A) has restored the matter back to the AO on the basis that the documentary evidence and submissions furnished by the assessee were not properly examined or appreciated by the AO at the assessment stage. Therefore, the intent and effect of the CIT(A)’s direction is to ensure proper adjudication after affording due opportunity, which is in line with the principles of natural justice. The appeal filed by the Department, in substance, does not challenge the merit or rationale of the CIT(A)'s decision to remand the matter for de-novo assessment. In view of the above discussion, and considering that no prejudice is caused to the Revenue due to the remand of the case to the file of AO, we hold that the appeal filed by the Department is infructuous and order of CIT(A) does not require any interference.

In the result, the appeal filed by the Department is dismissed. This Order pronounced in Open Court on 25/08/2025